The Ontario Superior Court of Justice has rejected an application from a man charged in connection with allegedly preparing false tax returns for clients who was seeking to quash search warrants obtained by the Canada Revenue Agency (CRA) in the course of its investigation.
Lawrence Watts was originally charged with two counts of fraud: one count involved allegations that he participated in the preparation of false income tax returns for clients; a second count related to allegations that he made false or deceptive statements in his own income tax returns. The second count has since been stayed, and the first count has not been proven.
According to the court decision, Watts argued that the search warrants, and the evidence obtained against him through those warrants, should be thrown out on several grounds, including that his Charter rights were violated when he filed his personal tax returns without being informed that he was under investigation; among other things.
The decision indicates that the criminal investigation into Watts began in December 2009, and that the CRA requests that he file his 2009 and 2010 tax returns were made in December 2010 and August 2011. As a result, Watts argued that his rights were violated by those requests “because he was not informed of the fact that he was under criminal investigation when CRA requested that he file the returns, the making of the requests violated the principle against self-incrimination, and constituted an unreasonable search and seizure.”
However, the court ruled that the CRA’s requests weren’t intended to further the criminal investigation. Instead, the court found that the returns were overdue, and that he was being asked to comply with the basic requirement that taxpayers file timely returns. “The accused was not being asked to provide evidence against himself in relation to offences already under investigation. Until the returns were filed, no false or deceptive statements could have been made, and no question of penal liability could therefore have arisen,” the court decision says.
“The filing of a tax return will only be incriminating if the return filed contains false or deceptive statements,” the decision adds. “A taxpayer who makes such statements in a return cannot be heard to complain that he or she was induced by the Minister to do so.”
However, the court also noted that the CRA did have possession of Watts’ tax returns when it applied for the search warrants, and that the returns were referred to in the information used to obtain those warrants. So, without conceding any breach of Watts’ Charter rights, the court noted that, “out of an abundance of caution”, the Crown prosecutor has agreed not to rely on the 2009 or 2010 tax returns; and, it has also stayed one of the counts of alleged fraud against him.
The Crown argued that, even after excluding the tax returns, reasonable grounds for issuing the warrants remains. And the court agreed, ruling that evidence in the information to obtain the warrants relating to allegations of preparing false returns for clients is not affected by the exclusion of the returns, and leaves sufficient grounds to justify a search of his business premises and his residence.
Ultimately, the court dismissed Watts’ bid to have the evidence obtained through the search warrants thrown out.